Perplexity AI revises Tiktok merger proposal that could give the U.S. government a 50% stake
Perplexity AI on Sunday revised the merger proposal it had submitted to TikTok parent ByteDance. The proposal, which would create a new entity combining Perplexity and TikTok U.S., would now also allow for the U.S. government to own up to 50% of the new company upon a future IPO, CNBC has learned.
A proposal document viewed by CNBC, which was shared with ByteDance and prospective new investors, detailed the creation of a new U.S. holding company, "NewCo."
The document proposes ByteDance contribute TikTok U.S., minus its core recommendation algorithm, in exchange for the company's existing investors receiving equity in the new company. Perplexity AI would offer itself up in exchange for its own investors receiving a distribution of the NewCo equity.
Money for the merger would come from "new third-party capital provider(s) (to be mutually agreed upon)," per the proposal document, which would provide capital for a "one-time dividend payment to ByteDance investors in exchange for simplified governance" and to help the new entity grow.
Perplexity AI, the artificial intelligence search engine startup competing with OpenAI and Google, started 2024 with a roughly $500 million valuation and ended the year with a valuation of about $9 billion, after attracting increasing investor interest amid the generative AI boom — as well as controversy over plagiarism accusations. Investors have viewed AI-assisted search as one of Google's key risks, as it potentially changes the way consumers access information online.
Last year, OpenAI, which started the generative AI craze in late 2022 with ChatGPT, introduced a search engine called SearchGPT. Google later launched "AI Overviews" in search, allowing users to see a quick summary of answers at